Congratulations, you are among the millions of Americans who choose to nurse their New Years Eve hangover by searching for homes online. In fact, New Years Day ranks among the top three most active days for people to search for a home online, along with July 6 and the weekend after Thanksgiving.
Question: We are planning to buy a home in the DC area sometime in the next 12-24 months and want to make sure we take that time to prepare. What should we know before buying a house that we can get started with now?
Answer: Whether you’re a first-time buyer, experienced buyer relocating from out-of-state, or moving locally here’s a list of things I review and plan out with clients before getting into the full swing of house hunting:
Local Customs, Requirements, Timelines, and Contracts
The home-buying process varies greatly across and within states. I think the most important thing you can do as a buyer is take an hour at the beginning of your buying process to become educated on the process, timelines, and key contractual terms/obligations in the area(s) you plan to search. This is also a good way to meet and vet different real estate agents early on to get a feel for who is willing to spend time with you up-front on education and planning vs pushing immediately for a sale.
Choose the Right Financing, Get Pre-Approved
Not all lenders offer the same loan products so it’s important to identify a lender who not only provides high quality service, but also has access to loan products that fit your profile (down payment, credit score, job industry, etc). Real estate agents, friends, and co-workers are all great sources of recommendations.
You’ll also want to get a pre-approval from at least one lender, one that actually reviews and verifies your financial documents, income, and employment instead of just running credit and reviewing an information sheet. This will decrease the chances of you being rejected from a loan, allow the lender to provide the most accurate recommendation, increase your leverage in contract negotiations, and reduce the amount of work required of you once you’re under contract.
Don’t Forget A Monthly Budget
I find that most people qualify for more than they actually want to spend, especially dual-income buyers, so budgeting is important. The biggest mistake most buyers make is budgeting strictly around the sale price, which is often driven by the amount you have for a down payment. It’s just as important to set a monthly budget for total housing expenses including mortgage, taxes, insurance and if applicable Association fees and/or mortgage insurance. Your lender can help you project monthly expenses at different price points based on different down payment amounts.
Do You Want Representation?
Determine if you want to have a real estate agent representing you in the transaction (breaking news…I highly recommend it) and, if so, what level of service you’re looking for. In most cases, the seller pays commission to their representing broker and the buyer’s broker, so representation often comes at little or no cost to buyers.
Push Yourself on Your Criteria
It’s very easy to come up with your top 3-5 criteria for a home and rare for most couples to disagree on the short list, but push yourself/yourselves to rank your top 10-12 criteria. This list can and will change as you search for homes, but it pushes you to think about more than bedroom count, schools, commute, and an open kitchen. This is especially valuable for couples. Just because you have the same taste in music, food, and TV shows that brought you together, doesn’t mean you’re on the same page about housing criteria.
Cash Needs + Savings
You need cash savings to pay for your down payment + closing costs of 2.5-3% of the sale price (in the DMV). Within a few days of your offer being accepted, you’ll have to transfer 1-5% (negotiable) of the sale price into an escrow account as deposit to secure the sale. You’ll spend about $1,000 out-of-pocket between contract and closing on inspections and the appraisal. Don’t forget how expensive moving is either, so keep enough savings for incidental moving expenses, new furniture, painting, etc. You should aim to haver 3-6 months of emergency savings tucked away after everything is paid for.
Other Key Providers
Most buyers are familiar with the role real estate agents and lenders play in the transaction, but don’t forget about the importance of working with a quality title attorney and home inspector. Your agent should be able to make a great recommendation.
How Long Will You Live There?
This is probably the most underrated conversation for buyers to have when they’re setting a budget and determining criteria. Your home-buying strategy should look very different if you’re planning to own for 3-5 years vs 10-12 years so give it serious thought and be realistic.
Deadlines and Lease Terms
Figure out if you have any strict deadlines for the move and iuf there are direct or indirect costs of buying before or after that deadline. It can be difficult in a low-inventory market to time a purchase, so make sure you’re aware of the pros and cons of purchasing before or after your deadline. If you’re renting, make sure you find out the cost of early termination or if month-to-month leasing is an option.
Reason for Your Purchase
I still haven’t met somebody who asks for a bad investment when they buy a house, everybody wants their home purchase to be a great investment, but you have to define what a great investment means to you. Does it mean your home appreciates in value well above the market over a certain period of time? If so, you’ll likely be in under-developed areas or in a house nobody else wants. Does a great investment mean you wake up every morning so happy with your home and neighborhood that the money is a secondary concern? I often remind clients that sometimes the best investment is buying a house that allows you to live there longer and eliminates one or more real estate transactions in your lifetime. In other words, the value you get out of being in a home for 10 years vs 3 years far surpasses a small increase in your budget.
I hope this list is helpful not just for local DC Metro readers, but for anybody getting started with their home search and wondering what you should know before buying a house. These are the conversations and steps I take with my clients every day to make sure they’re prepared, educated, and have the right strategy in place before we even step foot in a house together. I’m sure I left a few things off this list, but this should get you 95% of the way there. Feel free to give me a call or send me an email at Eli@EliResidential.com for the 5% I missed.
Question: A few of our friends who bought homes recently told us that we should expect to use an Escalation Clause/Addendum when we make an offer, if we want our offer accepted. Is that your experience and is there a better way of making a competitive offer?
Answer: I thought this would be an appropriate follow-up column to last week’s columnon the dangerously under-supplied housing market and it’s also become a frequent topic of conversation with clients.
With so much competition for hard-to-find homes that have just come to market, it’s critical for buyers to understand the purpose and risk/reward of using Escalation Clauses/Addendums in their offer.
Please note that this column is specific to contracts in Northern VA; Maryland and DC contracts vary in language and use.
What Is An Escalation Clause/Addendum (EA)?
An EA allows you to make an offer at a starting price while agreeing to increase your offer to a higher price if another offer is higher than yours. It includes a ceiling/maximum escalation value and an escalation factor, the amount your offer will increase by, over the next highest offer.
The contract allows for the seller to execute a purchase contract (ratify) at an escalated value, without the buyer having to agree to the new price. However, to protect buyers, the seller is required to deliver the next highest contract that was used to escalate your offer.
That other offer must also be materially similar, meaning the other offer cannot include seller credits or a material difference in contingencies (e.g. the other buyer has to sell a home before buying this one).
When To Use an EA
EAs are best used when there are multiple confirmed or expected offers and the seller has set a deadline, asking for best-and-final. It is very common in our market for sellers to set an offer deadline after their first full weekend on market and often those deadlines are set with the expectation that all offers will be best-and-final and the seller will make a decision shortly after the deadline, without any back-and-forth with buyers.
Buyers are often skeptical of this practice and assume that sellers will come back for more negotiating anyway, but in my experience, most sellers stick with the plan and a buyer who leaves something on the table is often informed that another offer was selected.
Managing the Risk & Reward of an EA
Used correctly, EAs allow you to maximize the chances of your offer being selected, without grossly overpaying relative to the rest of the market. It allows you to offer as much as you’re willing to pay for a home, without actually committing to pay your maximum if nobody else in the market values the home as much as you do.
In my experience being on both sides of the transaction, and speaking with colleagues, the winning offer in a multiple offer bid almost always includes an EA, however, the winning offer escalates all the way to its ceiling only about half of the time.
The clear risk to you is that you’re exposing the highest price you’re willing to pay to a seller and if there aren’t other offers that justify automatically escalating your offer, the seller may attempt to simply counter your offer at a number equal to or close to your escalation ceiling.
There are things both the seller’s agent and buyer’s agent can/should do ahead of accepting/offering EAs to avoid a potential messy situation where this occurs.
As the buyer, you should think about how you will respond if the seller attempts this. I have had (buyer) clients walk away from a deal when this occurs, leaving the seller with nothing or a much worse offer, but have also had (buyer) clients thrilled to be countered at a price below their escalation ceiling, even if there weren’t other offers to support it.
- EAs have become common-place in the market
- EAs should be used when there are confirmed or expected multiple offers and a deadline has been set by the seller
- EAs help the seller get the best price and allow buyers to maximize their chance of securing a home without grossly overpaying relative to the market
- EAs carry a lot of risk and reward, so be sure to understand them before including one in your offer
If you are thinking about getting into the market for a home purchase and would like to discuss strategies that will help you maximize your chances of a successful home purchase, without exposing yourself to unnecessary risk, feel free to reach out to set-up a meeting with me. You can reach me any time at Eli@EliResidential.com.
Question: We have been searching for a home for over 6 months and have expanded both our criteria and budget, but still not finding something we like. We have heard that the housing supply is low, is that true for Arlington?
Answer: The housing supply shortage in Arlington is a big problem and it’s not just Arlington that is feeling the pain, it’s most of Northern VA and the greater DC Metro (nationwide as well).
You’re not alone in your experience either, we have a handful of clients who have been looking for the better part of a year while also expanding their search area and budget, but unhappy with what’s available.
So, is the housing shortage mostly anecdotal and buyers are just too picky or to cheap? Nope… here are some charts that highlight the alarmingly low housing inventory in Arlington:
Eight Consecutive Quarters of Fewer Homes For Sale, Year over Year (YoY)
After seven straight quarters of YoY decreases in the number of homes for sale, Q1 2018 brought us the largest drop in YoY homes for sale with 21.1% fewer homes for sale than Q1 2017, which was already 7.2% lower than the number of homes for sale in Q1 2016. The chart below represents all homes for sale in Arlington.
Existing Housing Supply Would Only Last 1.5 Months
Months of supply measures how long the existing housing inventory would last given the last 6 months of demands (absorption). Most economists say that 4-6 months of supply represents a well balance housing market and Arlington has hovered around 1.5 months of supply for the last 6 months.
I broke out the chart below by housing type (detached, townhouse, and condo) to highlight the fact that the problem exists across all housing types, but town-homes have historically been the least supplied type of housing in Arlington.
Good Homes Are Selling Much Faster
This chart shows the YoY change in the number of homes sold within the first 10 days on market, which has increased the last six quarters in a row. There was an impressive 53.4% YoY increase from Q1 2016 to Q1 2017, followed by yet another double digit increase in homes sold within the first 10 days from Q1 2017 to Q1 2018.
The $1M+ Home Market Is Healthy
The only sub-market in Arlington with a healthy supply are homes listed for over $1M, with around four months of supply, while everything priced from $300k-$800k is under one month of supply.
However, the $1M+ sub-market is only “healthy” on paper, take a deeper look and you’ll see two major problems (cue comments that the problem with $1M+ homes is that they are $1M+). First, most of those homes are actually $1.5M-$2M and second, most of those homes are tear down/new construction with very similar size and design, leaving wealthy buyers who don’t like new construction with very few options.
Tips For Buyers
Here are some tips for buyers searching for hard-to-find homes in a tough market:
- There are few, if any, great deals in an under-supplied market. In this market, good value is finding a home that meets most of your criteria, that you’ll be happy in, that you can afford.
- If you want to negotiate, your best bet is to find something that has been on market for at least 2-3 weeks otherwise you’ll accumulate more rejected offers than homes currently on the market
- Put in the time early in your search to understand the market so you can recognize the right home when it comes on market
- Base your offer on what the home is worth to you, not just the asking price
- Understand how Escalation Clauses work and use them to your advantage
- Find out if there are offer deadlines (usually the Monday or Tuesday following the first day on market)
- Understand the cost-benefit of contingencies (inspection, financing, appraisal are the standard contingencies) and how you can maximize the strength of your offer with limited risk exposure
- Consider doing a pre-inspection — a home inspection before you make your offer
- Have a strong financing approval letter from a reputable lender
A lot of readers have reservations about the value real estate agents provide in buying or selling homes, but without coming off as too much of a salesman for my industry, difficult markets like this are where having a strong agent makes a big difference. Not just somebody to open doors for you and draft a contract, but somebody who understands your needs that you trust to advise you on making the right offer, at the right time.
If you have an agent you trust, rely on them. If you’re looking for somebody, I’m available every day of the week to talk or meet, just send me an email at Eli@EliResidential.com and I’ll be happy to help.
Question: What is the role of Business Improvement Districts in Arlington?
Answer: The Business Improvement Districts (BID) of Rosslyn, Ballston and Crystal Citydeserve much of the credit for turning these neighborhoods from convenient places to work to lively, family-friendly places to live.
Funded primarily by businesses located in the neighborhoods they represent, BIDs are an important bridge between residents, businesses and local government. Homeowners located in or near any of these BIDs can thank their leadership teams for increasing the value of their homes.
As a long-time Rosslyn resident, I have watched as Mary-Claire Burick and her team at the Rosslyn BID have transformed Rosslyn over the last five years.
I reached out to her for an interview to answer some questions about the role of BIDs in the community and how residents can take advantage of their influence on local government and business investment. Thank you Mary-Claire!
What is the role of a BID, and what role does the Rosslyn BID play in the community?
Business Improvement Districts are nimble organizations that wear a lot of different hats. In Rosslyn, we work on urban planning, transportation and business and community engagement, just to name a few.
But I think one of the most important roles that we play is that of a convener who brings together the perspectives of various stakeholders in our neighborhood –including residents, businesses and county officials — to advance initiatives that will help our community continue to thrive.
We are in constant conversation with folks on the street, in our restaurants and in our business community to better understand not only what they love about Rosslyn but also what they want to see improved.
How does the Rosslyn BID engage with residents and visitors?
As I mentioned, community engagement is one of our top priorities.
Probably our most visible presence on a daily basis is our Rosslyn Ambassadors Program. Our team is out on the street five days a week helping residents and visitors with directions and working to ensure our sidewalk and public areas are safe and clean. Be sure to say hello when you see them around the neighborhood in their purple shirts.
Our events are another important way that we connect and engage with area residents. In 2017, around 40,000 people attended more than 160 events that we hosted ranging from our popular Rosslyn Jazz Fest and Rosslyn Cinema series to lunchtime fitness sessions and pop-up concerts. Each one of these events represents a touch point for our team to engage with residents and employees in our region, and for interaction between these groups.
It’s that sense of community that these events help build that makes them so impactful.
What have been some of the BID’s most successful events?
Last year’s Rosslyn Jazz Fest was an incredible experience.
That event alone brought nearly 10,000 people to Gateway Park on one day, which was a record for us. The Rosslyn Cinema has long been a neighborhood favorite. Last summer, more than 20,000 people came out to catch their favorite movie. And it may surprise you, but Rosslyn is the largest pit stop for Bike to Work Day in all of D.C., Maryland and Virginia.
In 2018, we will continue to host these popular events, but are also introducing new activities and expanding others.
One example is the Rosslyn Farmers’ Market, which occurs weekly during the summer in Central Place Plaza. We’ve worked with FRESHFARM to introduce a new FRESHFARM Share program, similar to a community supported agriculture (CSA) program, to help bring more healthy food to Rosslyn residents and businesses.
I’d also like to point out that these events have a wider purpose and impact. They help bring thousands of visitors to Rosslyn who could one day be residents or tenants. And there’s an economic impact–restaurants and retail in Rosslyn usually see a boost in sales and exposure.
Some of the other local BIDs are Crystal City, Ballston and Georgetown. What are some of the most significant benefits of a community having a BID? Does a BID make sense for every community?
From my perspective, there are a lot of benefits that a community can realize from having a BID. But simply having a BID alone isn’t enough. It’s important for all of the stakeholders to have a clear vision for what they want to accomplish, and to ensure a BID has the resources and buy-in to help realize that vision.
A BID with a distinct mission can be a leading driver of change for a community, serving as a liaison between government, businesses and residents. Residents, in particular, have a real opportunity to utilize BIDs to help create a viable, economically sustainable community that reflects their vision of the neighborhood.
How have new restaurants and retail spaces helped change Rosslyn? Are there any openings you are particularly excited about?
Restaurants and retail have been a critical part of Rosslyn’s transformation from a commercial area to a more vibrant, urban, mixed-use area. Between 2015 and 2017, 17 new restaurants opened in Rosslyn, adding to the more than 65 restaurants, cafés and markets within a ten-minute walk of the Rosslyn Metro. We’ve also seen more restaurants and bars staying open later, like Barley Mac, Quinn’s on the Corner and Continental.
This year, we’re looking forward to the continued evolution of Central Place, which is bringing multiple new restaurant offerings to the heart of Rosslyn. I think folks are going to be really excited to hear what they have in the pipeline.
We are also excited for the Central Place Observation Deck, opening this summer. This 12,000 square-foot-space will offer an unparalleled view of the Mall and the U.S. Capitol. Offering snacks and light fare, the Observation Deck will be the perfect place to bring out-of-town friends, a date or a colleague for an after work drink.
How can residents get involved with their local BID?
Residents should utilize their local BIDs to advocate for what they would like to see in their community. Remember, a BID is there to serve the needs of a neighborhood’s residents as well as its businesses and visitors.
Residents can also get involved with their local BID by attending events, participating in community meetings and providing feedback on BID activities. Depending on an individual’s local BID, there may be opportunities to volunteer or be a community ambassador.
Question: We are buying a home in a few weeks and one of the closing costs is an optional $1,500 for Title Insurance. Do you recommend buying title insurance?
Answer: Yes, I do recommend buying Title Insurance. It’s a one-time fee that protects your ownership in what is likely the most valuable asset you own and you cannot decide to add Title Insurance in the future. However, like any form of insurance, it depends on your appetite for risk.
I’ve asked David Cartner, an attorney with Highland Title & Escrow, to provide a full explanation of the benefits of Title Insurance and some examples of when it would be used. Take it away David…
Do You Really Need Title Insurance?
As a real estate settlement attorney, buyers often ask me if they should purchase title insurance when buying a home. My response is that it depends on what level of risk the buyer is comfortable taking. A purchase of a house or a condominium is usually the biggest investment a person makes in their lifetime. If a buyer does not purchase title insurance, he/she risks losing the entirety of the investment.
Why, then, do buyers question purchasing title insurance when the risk of loss is so high? After all, no one seems to question the need for homeowners or rental insurance. I believe the reason is twofold: (1) buyers do not understand the benefits of purchasing it, and (2) title insurance is unlike other types of insurance in that it covers issues that have already happened.
Indeed, there is a long list of risks covered by title insurance, but basically what the buyer is hedging for are the unknown or hidden hazards that might jeopardize his or her ownership in the home. Hidden hazards may include:
- Liens that were not revealed in title exam or made known to settlement agent prior to closing. Normally, a title exam reveals any liens on the property which need to be paid off and released prior to closing. If, however, the title examiner overlooked a judgment, tax, or mortgage lien on the property or failed to note it in the title exam, the buyer would be liable to pay the lien incurred by the previous owner.
- Boundary line issues that an accurate survey would not reveal. For example, if a survey failed to note that a neighbor’s shed encroached on the purchaser’s property, title insurance would cover the cost of removing the shed and resolving any accompanying boundary line dispute.
- Forgery or lack of authority. If there was a forged signature on the deed in the chain of title, or a person or corporation signed a deed without authority to do so, the transfer of ownership to the buyer would be in question.
- An unknown heir of a previous owner came forth to claim ownership in the property.For example, suppose a seller passed away and his three children sold the house to a purchaser. If an unknown fourth child later came forth to claim his quarter ownership in the house, the purchaser’s title to the property is in jeopardy.
- Instruments executed under an expired power of attorney.
- Building permit violations. An enhanced version of title insurance is available that covers existing building permit violations. If a previous owner never obtained the appropriate building permits when remodeling a kitchen or bathroom or building a deck, enhanced title insurance would cover the cost of obtaining the appropriate permits. Note: the enhanced version is about 20% more expensive than the standard version and affords additional protection to the homeowner.
- Mistakes in the public record at the county in which the property lies. Recently, Arlington decided to do a look back process on taxes for individuals that were exempt up to 20 years ago. Arlington has audited the accounts to see if the exemption was applied correctly years ago. If not, the County is attempting to collect the back taxes from the current owner of the property. At the time of the closing, there was no evidence of any taxes owed and a phone call to the County would not reveal any taxes owed. At Highland Title & Escrow, we have had two of these cases arise and luckily the owner purchased title insurance and the title insurance company will pay the back taxes.
While lenders mandate that owners purchase lender’s title insurance (which only protects the lender’s interest in the property), homeowner’s title insurance is completely optional. It is a one-time fee that covers the owner for life.
Though there are certain factors that decrease the risk of an existing title defect, like having fewer previous owners of the house, a typical subdivided lot, or a recently constructed house, a buyer takes title to a house never knowing what title defect may already exist. In this respect, title insurance is unlike other types of insurance in which the purchaser can mitigate risk.
Contact David Cartner (703-760-3300 or email@example.com), an Arlington settlement attorney at Highland Title & Escrow, with further questions regarding title insurance or the real estate settlement process.
David is an Attorney originally from Asheville, NC where he learned about the business from his parents who are both Real Estate Attorneys.
Prior to joining Highland Title & Escrow in 2013, he worked as the Managing Attorney of the District of Columbia division for Morris Hardwick and Schneider. While there he tried many cases involving Foreclosure, Evictions, and Bankruptcy in front of the different courts in the District of Columbia.
David graduated, from the University of North Carolina at Chapel Hill, earning a B.A. in Public Policy specializing in Business and Government. He earned his J.D., from Campbell University, Norman Adrian Wiggins School of Law, graduating with a distinction in Business and Tax law.
David is admitted to practice law in the States of Pennsylvania, North Carolina, New York and the District of Columbia.
David currently resides in Arlington, VA with his wife, Melany, and their dog, Wheatley.
Question: Do you think the recent changes to the rankings of Arlington schools on GreatSchools.org will have an impact on home values?
Answer: Sometime in the last few months, GreatSchools.org quietly changed their school ranking criteria, which resulted in a drop in every high school and middle school in Arlington by 1-2 points (10 point scale).
In my experience, buyers in the DC Metro rely more heavily on GreatSchools because Niche lacks differentiation between schools (everybody is a winner). The change in Arlington County Public Schools rankings on GreatSchools is worth noting and I suspect that it will have a negative impact on the housing market.
In the About section of GreatSchools, they explain the changes in their grading criteria with the following: “In the past, the overall GreatSchools Rating in most states was based on test scores.
In some states*, the GreatSchools Rating was also based on student progress (or “growth”) and college readiness data (SAT/ACT participation and/or performance and/or graduation rates).
Our school profiles now include important information in addition to test scores — factors that make a big difference in how children experience school, such as how much a school helps students improve academically, how well a school supports students from different socioeconomic, racial and ethnic groups, and whether or not some groups of students are disproportionately affected by the school’s discipline and attendance policies.
Many of these important themes now have their own rating, and these themed ratings are incorporated into the school’s overall GreatSchools Summary Rating.”
Old vs New Rankings
Below is a table showing the before and after scores for all Arlington County middle and high schools, as well as a limited set of Fairfax County/Falls Church middle and high schools (the ones I had documented scores for before the change).
All “old” scores are as of Fall 2017. Note that my request to GreatSchools for the “old” scores for all Northern VA/DC Metro schools was denied.
Why It Does/Doesn’t Matter
I’d be lying if I told you I knew what the impact will be to Arlington home prices and demand, but I think a negative impact will be felt to some degree.
Schools are at the top of many buyers’ criteria list and most of those buyers, whether they’re local or relocating into the area, set a minimum score for the school boundaries they’ll purchase a home in and rely on GreatSchools for their data.
Below are some points I came up with for why it may or may not have an impact on the housing market:
- It Doesn’t: It appears the majority of public schools in Northern VA were reduced by 1-2 points on GreatSchools, so buyers are still as likely to choose Arlington as they have always been. The alternatives have not improved.
- It Does: While the reduction of most school scores in Northern VA may not change where or what people buy, the lower scores may decrease overall demand in Northern VA housing and result in less motivated buyers.
- It Does: I don’ know if Montgomery County and Northwest DC public schools saw similar changes, but if they did not, we may lose buyers to those jurisdictions because their relative value has increased.
- It Doesn’t: Arlington County Public Schools are still ranked the #1 school system in the state.
- It Doesn’t: It doesn’t appear that Niche.com has introduced any changes and Yorktown and Washington-Lee are ranked an A+ and Wakefield is ranked an A on that site.
- It Does: Could the fact that Arlington’s highest ranking high school is now a 5 impact the decisions of employers considering a move to the DC Metro?
I have no doubt that over the course of 2018 I will have local and out-of-town buyers tell me they do not want to purchase a home in Arlington because it has poorly rated (high) schools.
For me and my colleagues who know Arlington, we will point them towards resources that show how great the entire ACPS system is. However, if you recall from my column in July 2017, about half of the agents who closed a deal in Arlington only had one or two transactions here, meaning that agents who don’t know Arlington well are unlikely to have the appropriate background to give their clients better guidance about our schools.
What To Do?
GreatSchools.org wields a lot of power over home values across the country and the drop in our ratings is frustrating, but just like a bad Yelp review for a restaurant, we have to acknowledge the change and find ways to offset it by making it easy for buyers to find more favorable information.
I’d love to hear from readers in the comment section who purchased or are in the process of buying a home in Arlington, who placed a lot of weight in the GreatSchools rankings – how would these changes have impacted your decision when you bought or how are these changes impacting your current purchase strategy?
If you would like to discuss how the new GreatSchool rankings impact your upcoming plans to purchase or sell a home in Arlington, feel free to reach out to me at Eli@EliResidential.com to set-up some time to meet.
I am very excited to share with the readers that the Hyde Park Condominium at 4141 N. Henderson Rd, just a few blocks south of the Ballston Metro, successfully voted to change the by-laws to ban smoking in units and on balconies, as well as the already established ban in common areas!
In July 2016, I wrote an article about banning smoking in condos and the reaction from readers both in the comment section and in email exchanges afterwards clearly showed how many condo owners wanted to ban smoking in their buildings.
It is a challenge that only a few Boards have taken on and none have been successful in the way Hyde Park has.
I’d like to congratulate the Hyde Park Board and its residents on a job well done and hopefully paving the way for many more buildings to ban smoking inside and outside of private units in the near future. I firmly believe that this type of ban in condos will increase property values both near and long term.
I’d like to thank Greg Hunter Esq, a local attorney and the Hyde Park Covenants Chair who led the ban, for agreeing to write a column explaining how they accomplished the ban, lessons learned, and other experiences over the last few years.
Below is what Greg wanted to share with the ARLnow readers. It is not intended to be an official statement from Hyde Park.
Hyde Park Smoking Ban, Greg Hunter Esq.
The owners of the Hyde Park Condominium recently passed a bylaw amendment to ban smoking in every part of the property, including private units and balconies.
With over 300 residential units and several ground-level commercial suites, Hyde Park is the first condominium in Arlington to successfully amend their bylaws to go smoke-free.
With the new bylaw, smoking is now banned in every part of Hyde Park, including outdoor areas, private homes and on balconies. There is a limited and non-transferable right for current unit owners to continue to smoke in their own units (grandfather clause), but not on their balconies.
Why A Bylaw Amendment?
Passing a bylaw amendment was not our original goal.
In an ideal world, everyone could live as they wish; any one of us could, if we so desired, smoke cigarettes or rehearse with our metal band or keep peacocks on the balcony and it wouldn’t bother anyone else.
At Hyde Park however, and I suspect every other condominium in the world, one person’s right to enjoy herself does not allow her to annoy her neighbors. We tried a lot of things to solve the problem without a bylaw amendment, including banning smoking in common areas and improving the ventilation systems, but in the end the only effective option we had was a bylaw amendment.
How Did Hyde Park Get There?
After hearing complaints about smoking for years we took a poll in 2014, asking all residents — owners and renters — to answer a few questions about their attitudes toward smoking.
We put a short poll card in every mail box and got a tremendous response, with over 80% of our residents responding. Our results were interesting — an overwhelming majority of residents reported that they really didn’t like second hand smoke and only a few residents reported having one or more smokers living in their unit, but the only thing a majority would support was a new rule to ban smoking in all common areas; only about 20% of residents supported passing a bylaw at the time.
Since smoking had long since been banned in all of the indoor common areas, we passed a new rule in 2015 to ban smoking in all of the outdoor common areas. “No Smoking” signs went up in the garage and around the property.
At the same time, our engineer and maintenance staff made improvements and repairs to the HVAC system and used a lot of sealants to try and keep air from passing from one unit to another, with little success preventing smoke from traveling between units.
The most important development from those early efforts was educational — nearly everyone at Hyde Park was against having second-hand smoke waft into their unit, but very few of us understood just how many of our neighbors felt the same way until we saw the poll results.
After about a year with the new rule, more and more residents asked about passing a bylaw at each monthly board meeting, so we took another poll in 2016. Knowing that we would need an affirmative vote from more than 66.67% of the total ownership, we only polled unit owners, the people who could actually vote.
Once again we got a tremendous response, with about 60% of resident and non-resident owners returning a poll card; about 80% of the resident owners and 75% of the non-resident owners expressed support for a bylaw. With strong grass-roots support, and little success from anything else we tried, we held several meetings and drafted a bylaw amendment proposal.
Over the winter and spring of 2017, we held public meetings, answered every question we heard and edited our draft amendment to reflect what a majority of the ownership wanted. Our draft amendment went to the Association’s counsel, back to us for review, back to counsel and finally to the Board.
They voted to approve the text of the proposed bylaw amendment and set a voting schedule for later in the year. A package was prepared for every unit owner with a letter from the President of the Association, a copy of the proposed amendment (a “consent form”), and answers to nearly every question we got in our three years of meetings.
The Board gave us 90 days to get the vote in and we managed to get over 68% of the ownership – about 220 units – to sign their forms before New Year’s Eve. From there, the consent forms went to our counsel for review, and within a few days our President was able to file the bylaw amendment with the Arlington County Circuit Court.
Questions And Advice?
Polling is important. Without the poll results many unit owners will not be comfortable with the idea of voting for a bylaw amendment, and without strong support there is no reason to take on all of the work.
It’s not a vote in the traditional sense. The law requires that at least 66.67% of the total ownership sign documents that show their consent to the amendment, and the votes are weighted by each owner’s percentage of the total ownership – this is a property record your neighbors are going to be able to see.
While you have to do what you can to preserve owners’ privacy, there’s no hiding from the results. Eventually any unit owner can know how anyone else voted, pro or con.
It’s also not an election in the traditional sense. There’s no question that smokers are a small minority in Arlington, especially in expensive condominiums.
We live in a county where smoking is illegal in every shop, office, store, restaurant, bar, classroom, theater, museum, bus station, airport, subway train, taxicab and outdoor parks, with little complaint. A strong majority of your ownership is going to support this, and very few people will be against it. T
he real question is whether you can get more than 2/3 of the ownership to sign the paper. It’s really more of a bookkeeping exercise. It’s also important to note that a an abstention or non-vote has the same effect as a “no” vote. 2/3 of the ownership must actually vote “yes” for the bylaw amendment to pass.
To some people, it will look like you’re piling on. To get the votes we needed, we tried everything we could think of. Small groups of supporters set up a table in the lobby several times to try and get a few votes, individual unit owners recruited and cajoled friends and neighbors around the building, personal notes were sent to every unit owner who hadn’t yet voted and more than a few nerves were frayed.
Having done this once it’s clear to all of us at Hyde Park just how burdensome the 66.67% requirement is; if you’re serious about this you’re going to have to do everything you can to get votes in, and some people are going to be perturbed.
There is a generational difference in how people view smoking. We have younger smokers who voted in favor of the amendment because they understand how offensive and toxic second-hand smoke is and they don’t want to impose on their neighbors or deal with anyone else’s smoke.
At the same time, we have older residents who don’t smoke (and non-resident owners who don’t allow their renters to smoke) who grew up in a world where smoking was allowed nearly everywhere and thought the bylaw amendment was a terrible idea.
One of our residents did some research that was very helpful in our efforts. The 2010 Census reflects that the number of Americans who smoke continues to decline and that Arlingtonians smoke at a much lower rate than the national average.
All of the Realtors we spoke with agreed that non-smokers outnumber smokers in the condominium market by an even larger margin, maybe as high as 19 to 1. At the same time, even as the number of rental buildings and condominium communities goes up each year, the number of rental apartments and condominiums where smoking is allowed actually shrinks.
There were approximately 32,000 rental units in Arlington County when we started this process, with about 8,000 of those units in condominiums. As commercial landlords like JBG Smith and Equity continue to ban smoking in their properties the smokers looking for apartments have to rent in condominiums.
And as new condominium communities are either LEED-certified or start out with smoke-free covenants, both renters and condominium buyers who smoke have to look to existing condominium communities rather than new buildings. Smokers may be less than 10% of the people looking to buy or rent a condo in Arlington, but if they can’t rent in commercial properties or buy in new buildings the existing condominiums are going to have more smokers looking to move in.
Hyde Park was the first condominium community in Arlington to ban smoking with a bylaw, but we’re not going to be the last.
Greg, thank you very much for such an informative write-up on the smoking ban. If anybody would like to follow-up with Greg to learn more about his experience over the last 3+ years leading this effort, please reach out to me at Eli@EliResidential.com, and I’d be happy to make an introduction.
I would also encourage other condo owners and Board members to use the comments section to share how smoking bans have been discussed within your communities and whether Hyde Park’s success may help your Board move forward with a similar effort.